Athens: Greece is on track to lose its long-held status as the euro zone’s most indebted country, with its public debt ratio expected to drop below Italy’s by the end of the year.
According to officials, Greece’s debt is projected to fall to around 137 percent of gross domestic product (GDP), marking a notable improvement from recent years.
Italy, by comparison, expects its debt burden to edge higher. Government projections show debt rising to about 138.6 percent of GDP in 2026, up from 137.1 percent in 2025.
While Italy’s debt is forecast to stabilize in the following years and gradually decline, it will remain slightly above Greece’s level in the near term.
The shift reflects a steady fiscal recovery in Greece after years of financial strain. The country’s debt has already dropped sharply from its peak of over 200 percent of GDP in 2020 to below 146 percent last year. This improvement has been supported by consistent economic growth, stronger revenues, and disciplined fiscal management.
Officials say the updated debt projections will be included in Greece’s upcoming multi-year fiscal plan to be submitted to the European Commission.
The government is also moving to repay about €7 billion in bailout-era loans ahead of schedule, signalling improved financial stability.
Italy Faces Slower Momentum
Italy’s debt trajectory tells a more gradual story. Although it reduced its debt ratio in recent years, progress has been slower. Economic growth has remained modest, with the country recording sub-1 percent expansion for three consecutive years despite support from European Union recovery funds.
Prime Minister Giorgia Meloni has attributed part of the pressure on public finances to costly housing incentives introduced by previous administrations. These measures, while supporting construction activity, have weighed on fiscal consolidation efforts.
Economic performance has further widened the gap between the two countries. Greece has recorded growth above 2 percent annually in recent years, driven by investment, domestic demand, and a strong tourism sector. Italy, meanwhile, continues to struggle with structural challenges that limit expansion.
While both countries remain among the most indebted in Europe, the changing rankings highlight a broader shift in fiscal dynamics within the euro zone. Greece’s progress underscores the impact of sustained reforms and growth, while Italy faces the task of reviving momentum to bring its debt down more decisively.
